Low-priced EVs Drive Growth As Mid-tier Brands Slip
Chinese-made Tesla mid-size electric vehicle SUV ‘Model Y.’
As the structure of ‘selling only if it is cheap or expensive’ solidifies in the imported car market, the phenomenon of brand concentration is also intensifying. While mid-to-low priced demand is being rapidly absorbed by the proliferation of low-cost electric vehicles centered around Tesla, the demand for high-priced vehicles over 100 million won (approximately $67, 934) is maintained, thereby weakening the position of mid-to-low priced imported car brands.
According to the Korea Automobile Importers & Distributors Association (KAIDA) on April 27, the sales of imported cars priced below 40 million won in the first quarter of this year surged by 596.7% compared to the same period last year, reaching 2,083 units. The 40 million won to 50 million won segment also increased by 368%, driving market growth. On the other hand, the 50 million won to 70 million won segment and the 70 million won to 100 million won segment only grew by 14.3% and 2.2%, respectively. In contrast, high-priced vehicles over 100 million won increased by 10.3%, maintaining stable demand. The overall market grew by 35.4%, but most of the increase occurred in the low-price segment.
Looking by brand, this trend is even more pronounced. Based on an electric vehicle lineup prioritizing price competitiveness, Tesla sold 20,964 units from January to March, taking up 25.5% of the total sales volume and ranking first. This was followed by BMW (19,368 units) and Mercedes-Benz (15,862 units), with the top three brands occupying about 68% of the total. The market is being reorganized around cost-effective Teslas and premium German cars.
In particular, Tesla is rapidly dominating the bottom of the market by absorbing entry-level demand with Chinese-made electric vehicles in the 40 million won to 60 million won range. With China’s BYD (3,968 units) and Sweden’s Polestar (954 units) also joining in, price competition for electric vehicles is becoming even more fierce. Meanwhile, BMW, Mercedes-Benz, Porsche, and other existing brands are maintaining stable demand by defending the high-priced market based on their brand competitiveness.
In this process, brands occupying the mid-price range are gradually losing their ground. Japan’s Honda recorded sales of only 211 units from January to March this year, with its market share remaining at the 0.26% level. France’s Peugeot (184 units) and the United States’ Ford (165 units) also showed similar trends. They have been placed in a situation where they become a so-called ‘sandwich’, falling behind Tesla and others in price competitiveness and lagging behind German cars in the premium lineup. The industry views that Honda’s recent decision to withdraw from the domestic finished vehicle market is not unrelated to such changes.
An official in the finished vehicle industry forecasted, “The recent imported car market is forming two main pillars: electric vehicle price competition centered on Tesla and the premium strategy of German brands,” and added, “If mid-priced brands fail to find a differentiation point, there is a high possibility that their position will become even narrower.”
Michael Herh
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